Wescott Company Balance Sheets At December 31 Assets: Cash................................................... Accounts receivable, net............................ Merchandise inventory.............................. Prepaid expenses..................................... Equipment............................................. 280,600 Accumulated depreciation-Equipment............ Total assets.............................................. Liabilities: Accounts payable.................................... Income taxes payable............................... Notes payable (long term).......................... Total liabilities.......................................... Equity: Share Capital........................................ Share Premium...................................... Retained earnings................................... Total equity............................................. Total liabilities and equity........................... (80,600) $522,280 $ 52,850 15,240 59,200 $127,290 200,000 53,000 141,990 $394,990 $522,280 2011 2010 $ 65,200 56,750 144,850 12,680 245,600 (97,600) $427,480 $ 45,450 12,240 79,200 $136,890 150,000 40,000 100,590 $290,590 $427,480 $ 488,000 (368,200) 4,700 124,500 (41,100) $ 83,400 $ 85,600 72,850 157,750 6,080 Wescott Company Income Statement For Year Ended December 31, 2011 Sales................................................... Cost of goods sold............................ Depreciation expense.............................. Other operating expenses..................... Interest expense................................... Gain on sale of equipment............................... Income before taxes.................................... Income taxes expense............................... Net income............................................ $212,540 43,000 106,260 6,400 .../ - 5 - ACC1002 __________________________________________________________________________ Additional information 1. A $20,000 note payable is retired at its carrying amount in exchange for cash. 2. The only changes affecting retained earnings are net income and cash dividends paid. Cash dividends paid is to be classified under financing activities. 3. New equipment is acquired for $120,000 cash. 4. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700. 5. Prepaid expenses relate to Other operating expenses on the income statement. 6. Interest paid is to be classified under operating activities